Plaintiffs have brought this action under Section 27 of the Securities Exchange Act of 1934, 15 U.S.C. § 78a et seq., to recover $28,000 which they lost in speculative activity in securities while trading through the defendant, Francis I. Dupont & Co., a member firm of the New York Stock Exchange which acts as a broker to buy and sell securities on behalf of its customers through the facilities of various national securities exchanges. Plaintiffs' contention is that but for several violations of the Securities Exchange Act in defendant's management of their trading accounts, these losses would not have been suffered. Specifically, it is alleged that the defendant "churned" plaintiffs' accounts, generating commissions from excessive speculative activities through transactions for which authorization had not been given. Defendant, while conceding excessive activity in the accounts, contended that all transactions were specifically authorized by plaintiff, Robert A. Powers. Therefore, the result turns upon an assessment of the credibility of the plaintiffs and defendant's employees who managed the accounts. The case was tried before the court without a jury on April 27, 1972, and we have resolved the issue against the plaintiffs.

FINDINGS OF FACT

1. On or about May 1, 1968, the plaintiff Robert A. Powers, opened a cash account for the purchase and sale of securities with defendant, Francis I. Dupont & Company.

2. Shortly after opening the account, plaintiff Robert A. Powers terminated his executive position with Xerox Corporation and thereafter spent considerable time in the offices and board room of Francis I. Dupont & Company, devoting a great deal of attention to the available prospects for speculation in securities.

3. The account of plaintiff Robert A. Powers reflects excessive activity for his initial investment of less than $6,000.

4. Plaintiff gave orders for all transactions in his account and no orders were left to the discretion of defendant's account executive, Edward M. Schellenger, Jr.

6. By March 1969, plaintiff Robert A. Powers was so heavily invested in his own account that he was unable to comply with a call for additional margin and the securities held in his account were sold at the market price resulting in an extensive loss.

7. Thereafter, plaintiff Robert A. Powers continued to speculate heavily by placing orders in his wife's account. Defendant requested and obtained a trading authorization signed by Stasia C. Powers, empowering Robert A. Powers to place orders for trades in her account.

8. Plaintiff Robert A. Powers spent considerable time in the defendant's offices and board room during the months he traded in his wife's account, devoting a great deal of attention to available prospects for speculation in securities.

9. The account of Stasia C. Powers reflects excessive activity for an initial investment of less than $10,000, but plaintiff Robert A. Powers gave the orders for all transactions in her account and no orders were left to the discretion of defendant's account executive, Edward M. Schellenger, Jr.

10. In April 1969, pursuant to instructions given by plaintiff Robert A. Powers, defendant opened an account for himself ...

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